Thursday, September 04, 2014Last Update: 6:25 AM PT

PG&E Fights Pipeline Explosion Indictment

(CN) - Pacific Gas and Electric Co. asked a federal judge to strike "irrelevant or prejudicial allegations" in an indictment involving the 2010 pipeline explosion that killed eight people and flattened a neighborhood in San Bruno, Calif. PG&E was charged in July with obstructing a federal investigation into the pipeline explosion. A superseding indictment from a federal grand jury charges the utilities company with one count of obstruction and 27 counts of violating the Natural Gas Pipeline Safety Act. PG&E was charged in April with 12 counts of violating the Safety Act. Prosecutors say the utilities company lied to National Transportation Safety Board investigators about its pipeline safety policies. The government claims that PG&E operated under a dangerous policy from 2009 to mid-2011. The government claims in the criminal indictment that PG&E knew of deficiencies in its 46,000 miles of gas transmission and distribution pipelines but failed to maintain accurate and complete records of leaks, or to make the records it did have accessible, or to maintain welding maps or inspection records, or to keep records about how the lines were manufactured. The indictment also accuses PG&E of more than two dozen violations of the 1968 pipeline safety law, including knowingly keeping inaccurate and incomplete records and not taking appropriate action when threats to pipelines were identified. "The superseding indictment refers to the tragic San Bruno pipeline accident 11 times and alleges that 'the victims suffered losses of approximately $565 million,'" PG&E says in its motion to strike those references. "On a first reading, it is perfectly natural for one to assume that the grand jury has alleged that criminal conduct caused the explosion and the losses. Indeed, that appears to be the point of the indictment. "But a closer reading reveals that the grand jury does not actually allege that any of the 28 charged felonies caused either the accident or any victim losses. This suggests that, after the government's years-long investigation, the grand jury did not find probable cause to believe that any Pipeline Safety Act violation caused the San Bruno explosion." As it has in the past, PG&E characterizes the San Bruno pipeline explosion as "a terrible accident," one that "devastated many people and harmed an entire community." " A pipe with a faulty weld was placed in service in 1956, where it performed safely for 54 years. Then, suddenly, it failed catastrophically at a pressure less than its historical capacity," it says of the Sept. 9, 2010 explosion. In 2012 the company paid $70 million to the city of San Bruno to support community recovery efforts. It says it has established a $50 million trust fund to cover the cost of fire damage in the city and has given more than $50 million in goods, services, relief checks and more to affected residents. But PG&E claims that none of its employees committed a crime - a knowing and willful violation of pipeline safety regulations - which caused the accident. "Now, after two indictments, it appears that the grand jury agrees," the utility says. "The combined federal, state and local prosecution team did not obtain an indictment from the grand jury that alleges that any crime caused the San Bruno explosion. "Additionally, the indictment requests an enormous fine for victim losses in an amount that appears to be based on the San Bruno explosion. Yet there is nothing indicating that the grand jury found that any of the 28 alleged crimes caused any loss in any particular amount," PG&E says. "These vague charges violate the Constitution's mandate that an enhanced fine requires that the grand jury find and allege facts indicating that a particular crime proximately caused a particular victim loss or defendant gain, and in an identified and supported amount. "On these basic facts, this indictment is silent. Since the grand jury did not find facts supporting the alleged maximum fine and state those facts in the indictment, the penalty allegations cannot stand and we respectfully ask the Court to strike them as well." In April, Louis Marini, owner of 14,000 shares of PG&E stock, sued the utility, accusing its officers of failing to properly maintain gas transmission lines, resulting in the deadly explosion that exposed shareholders and the company to "billions of dollars in losses." Marini claims that "despite the massive amount of evidence that has surfaced regarding PG&E's inaccurate and missing records, PG&E continues to rely on those records." The utility is represented by Steven M. Bauer and Margaret A. Tough of Latham & Watkins LLP, and Walter F. Brown Jr. and Eric M. Hairston of Orrick, Herrington & Sutcliffe LLP. Both firms are in San Francisco. A spokeswoman for the U.S. Attorney's Office declined to comment of PG&E's motion.